Policy will remain loose during fiscal year 2010/11 (April-March) before tightening gradually in 2011/12, followed by deeper consolidation thereafter, although the budget will remain in deficit throughout the forecast period because of heavy investment in infrastructure. The government now expects the shortfall to narrow to 5.3% of GDP in 2010/11, which is better than expected, because of a recovery in revenues, and to continue falling, to 4.6% of GDP in 2011/12 and 4% of GDP in 2012/13. The deficits will push up public-sector borrowing, mainly from domestic markets, although several years of prudence mean that South Africa's public debt ratio is relatively low and can tolerate the increase without threatening the country's creditworthiness: the public debt burden will remain below 50% of GDP, which is low by global standards. The fiscal position will be more challenging towards the end of the forecast period because deeper consolidation will be needed to stem the rise in debt-service costs and protect investor confidence. The government will therefore need to make some tough spending choices in the face of persistent pressure to spend more on infrastructure, social welfare and wages-especially in the run-up to the 2014 election. We nevertheless expect the Treasury to maintain fiscal discipline and predict that the budget deficit will edge down to 3.2% of GDP in 2013/14, to 3.1% of GDP in 2014/15 and to 2.7% of GDP in 2015/16.